Life Settlement Broker vs. Direct Buyer: The Advisor Guide

Life settlement broker:

• Represents the policy seller exclusively with a fiduciary obligation.
• Submits the policy to multiple buyers simultaneously to generate competing offers.
• Handles underwriting submissions, negotiation, and closing documentation.
• Earns a commission on the gross sale price, paid at closing by the buyer.

Direct buyer (provider):

• Purchases the policy directly using their own funds or institutional capital.
• Provides a single offer based on internal underwriting models.
• Earns profit from the spread between purchase price and eventual death benefit.
• Has no legal duty to maximize the seller's proceeds or disclose competing offers.

Consumers who sold through LISA member brokers received nearly nine times their cash surrender value in 2025. That figure reflects what market competition produces when a policy is properly positioned and submitted broadly.

Use a broker when:

• The client's primary goal is maximizing net proceeds, and speed is secondary.
• The policy face value is above $500,000, where buyer variation tends to be largest.
• The insured has moderate to significant health impairment, making life expectancy a competitive underwriting factor.
• The policy type is complex (universal life, variable life) and may attract varying valuations across buyers.

Consider a direct buyer when:

• The client has an urgent liquidity need and timeline is the overriding constraint.
• The broker market has already been tested and a direct offer represents a legitimate top-of-market figure.
• The policy is relatively small or straightforward, limiting upside from competitive bidding.

Licensed life settlement brokers carry a fiduciary obligation to act in the client's best interest. Direct buyers have no legal duty to disclose competing offers or maximize the seller's proceeds. For advisors with their own fiduciary obligations under the CFP Board Code of Ethics, that asymmetry matters.

Before recommending any broker or direct buyer, advisors should verify:

• Confirm the entity holds a current, state-issued license (broker or provider, as applicable).
• Check for active membership in LISA or comparable industry associations.
• Request written disclosure of all fees, commissions, and compensation arrangements.
• Obtain documentation confirming the seller has received independent review of alternatives.

For more on how advisors integrate life settlements into their workflow, see Why Financial Professionals Use Life Settlements in 2026.